McGinn testifies in own defense

Assistant U.S. Attorney set to cross-examine embattled Albany broker Tuesday in Utica

1:17 pm, Sunday, August 2, 2015

Timothy McGinn, right, and David Smith leave the U.S. District Courthouse after their arraignment for fraud Friday Jan. 27, 2012 in Albany, N.Y. (Lori Van Buren / Times Union)

Timothy McGinn, right, and David Smith leave the U.S. District...

U.S. Attorney Richard Hartunian announces the indictment of Timothy McGinn and David Smith Thursday Jan 26, 2012 at the U.S. District Courthouse in Albany, N.Y. McGinn and Smith are accused by the SEC of defrauding 900 investors of $136 million. Cliff Holly, Special Agent-in-Charge, FBI, stands on the right. (Lori Van Buren / Times Union)

U.S. Attorney Richard Hartunian announces the indictment of Timothy...

David Smith arrives for his arraignment at the U.S. District Courthouse Friday Jan. 27, 2012 in Albany, N.Y. (Lori Van Buren / Times Union)

David Smith arrives for his arraignment at the U.S. District...

Timothy McGinn leaves the U.S. District Courthouse after his arraignment for fraud Friday Jan. 27, 2012 in Albany, N.Y. (Lori Van Buren / Times Union)

UTICA — As he testified in his own defense Monday at his securities fraud trial, embattled Albany broker Timothy M. McGinn said repeatedly that he is "not guilty" of the charges leveled against him by the federal government.

McGinn, 64, testified for more than five hours as he detailed his former brokerage's operations and gave his version of the circumstances behind numerous deals that are at the center of a 30-count indictment charging him with conspiracy, wire fraud and tax evasion.

McGinn explained that he and his partner and co-defendent, David L. Smith, never intentionally defrauded any clients, only took loans that they were entitled to receive and that he had paid or intended to pay all taxes owed to the state and federal government.

McGinn said repeatedly that the investment deals the government alleges fell apart due to fraud, and left hundreds of investors cut off from their money, had only collapsed after federal regulators shut down the Albany brokerage, McGinn, Smith & Co., in April 2010. That's when the brokerage's accounts were frozen and all assets seized by a federal receiver.

"With respect to each of these transactions, Mr. McGinn ... was it your intent ... and was it your goal, that they succeed?" Jones asked. "Yes," McGinn said.

The trial, entering its fourth week, has brought testimony from federal agents, financial regulators, investors who have lost money, and former business associates of McGinn and Smith.

The two men are accused of raiding investor accounts and using those funds to pay for unauthorized business and personal expenses, including home mortgages and golf club memberships. They're also accused of creating back-dated promissory notes to make it appear that hundreds of thousands of dollars they received were loans rather than fees.

McGinn is scheduled to be cross-examined Tuesday by assistant U.S. Attorney Elizabeth Coombe. Smith is scheduled to testify next and closing arguments could take place later this week before the case is turned over to the jury.

McGinn said he and Smith had devised a plan to salvage numerous investor accounts that went sour when the economy spiraled in 2008. Their business largely recruited investors for deals that funded business ventures by cable and alarm companies. The business began unraveling when some of those companies, including a luxury cruise line, were unable to meet their obligations to repay loans.

McGinn said he helped draft a letter to the investors whose repayments could not be met.

"We obviously wanted to convey the message ... that there was a rescue plan, that we were not abandoning these investors," McGinn said.

On the back-dated loan documents, McGinn testified that the documents were improperly cast by an attorney and should have been made clear they were re-created because the original loan documents could not be located. He said there was no effort to deceive regulators and the loans, which he said they were entitled to receive, would have been repaid with interest by last year.

"Did you ever consider it anything but a loan to you?" Jones asked. "No," McGinn said, looking only occasionally at jurors when he gave his responses.

Jones also asked McGinn about conversations he had with a former business partner, Matthew Rogers, who pleaded guilty to tax charges and agreed to cooperate with federal prosecutors. The conversations, which took place beginning in 2010, were secretly taped by Rogers as he wore a recording device or taped conference calls with McGinn at the direction of Internal Revenue Service agents.

Jones asked McGinn if the recordings had revealed McGinn describing the loans "as anything but a loan?"